The mood is improving in Asia.
The steady selling of risk assets and flight to the US dollar has given way to some optimism in Asia and that’s reflected in decent bids in the Australian dollar and broad USD weakness. That’s come with some oil selling as the US floats more measures to stop the runaway rise in crude prices.
Notably, gold remains strongly bid as it has all week in Asia-Pacific hours. It just hit a session high, up $31 to $51.06.
S&P 500 futures are fractionally higher but the Nikkei’s early bounce has given way to selling and it’s down 1.3%, falling below the initial opening levels.
As for the Australian dollar, it’s been a challenging week to trade as it’s mostly been bounced around by war and oil sentiment. Early this week, the GDP numbers were strong and combined with oil prices, that should boost the odds of a rate hike but that hasn’t been reflected in the currency.
Technically, AUD is showing some resilience near the best levels of the year. The lows from the early spike lower due to the war have held.
That’s a good sign for AUD/USD going forward as it continues to benefit from being on the periphery of the war and the tariff war. It will also benefit from China stimulus, which the NPC hinted at this week. The biggest tailwind is probably in commodity markets, where Australian has much of what the world wants, including gold.
Canada’s Mark Carney is visiting and helped to forge a critical minerals partnership that should clear the way for more investment. Australia has largely managed to play all sides including China and the US while avoiding turmoil in the property market. That could set up a steady bid once some of the war clouds clear.
This article was written by Adam Button at investinglive.com.